Public Finance Serves Special Needs of Rocky Mountain Human Services
Rocky Mountain Human Services (RMHS) is a nonprofit organization serving nearly 10,000 individuals, including more than 2,000 professionals and 7,500 additional Coloradoans in nine district programs. They are dedicated to serving vulnerable populations throughout the Rocky Mountain West. RMHS is currently serving:
- Children with developmental delays and disabilities
- Adults with cognitive and intellectual disabilities
- Adults who live with the effects of traumatic brain injury (TBI)
- Military personnel and veterans who return from Iraq and Afghanistan with a TBI
- Veterans who are homeless or in jeopardy of losing their homes
- Families who are striving to break the cycle of poverty
- Professionals who seek to create meaningful employment opportunities for individuals with intellectual challenges
Denver-based Hutchinson Shockey Erley & Co. was asked by RMHS to help restructure the agency's $14.5 million tax-exempt bond issue used to finance its headquarters building, furniture and equipment. Helping RMHS take advantage of lower interest rates and eliminating previously required financial guaranty insurance and guaranteed investment contracts would free up substantial funds to apply to these programs. Unfortunately, the financing was under-collateralized due to capitalized interest and issuance costs in the original bond issue. The collateral deficit was stifling refinance attempts with traditional lenders and underwriters.
Hutchinson Shockey Erley was ultimately successful in finding a private placement investor who was comfortable with the security of a revenue pledge from RMHS. The resulting refinance is saving RMHS more than $3.5 million in present value savings in addition to relieving the nonprofit of many onerous covenants and restrictions.
In addition to producing a profit, the RMHS transaction has had a lasting and more profound effect on Hutchinson Shockey Erley. Both the firm and its lead in the transaction, Mike Hark, have become donors and Mike serves as a member of the fund-raising committee for soldiers with traumatic brain injuries (TBI). During summer 2013 they generated more than $35,000 for TBI as a part of the Denver Colfax Marathon. In this case, as in many, there was a multiplier effect on the public benefit provided by the financing transaction.
This case study is based on an article published in the Monitor by Bob Neptune, Consultant, Government Financing at The Alta Group.